Purchases of new U.S. homes rose in April by the most in six months as buyers began to respond to falling mortgage rates.

“The deep freeze is over and I think we can expect new home sales to continue to rise,” said David Berson, chief economist at Nationwide Insurance in Columbus, Ohio, who projected a 432,000 rate of April sales. “It’s better; it’s still not strong.”

New-home sales, which account for about 7 percent of the residential market, are tabulated when contracts are signed, making them a timelier barometer than transactions on existing homes.

New Home Sales by Region (in thousands)

Year

Month

United States

Northeast

Midwest

South

West

Month's Supply

2013(r)

January

453

31

58

222

142

3.9

February

448

38

67

209

134

4.1

March

440

33

61

237

109

4.2

April

452

32

62

260

98

4.3

May

431

25

70

238

98

4.5

June

459

33

56

253

117

4.2

July

367

32

53

190

92

5.6

August

379

32

58

206

83

5.5

September

399

25

60

220

94

5.5

October

450

32

68

264

86

4.9

November

445

33

57

243

112

5.0

December

442

25

60

251

106

5.1

2014

January (r)

457

30

51

256

120

5.0

February (r)

437

24

57

261

95

5.1

March (r)

407

30

57

228

92

5.6

April (p)

433

22

84

235

92

5.3

Take a good look at that last line. The surge in new homes is entirely in the Midwest. Didn't the Northeast have bad weather? Perhaps the bad weather lingered on in the Northeast. Alternatively, perhaps the Midwest was the most undervalued area.

Regardless of reason, this huge distortion should not inspire much national confidence.

Percent Changes and 90% Confidence Levels

Percentage Change

United States

Northeast

Midwest

South

West

Month's Supply

April 2014 from March 2014

6.4%

-26.7%

47.4%

3.1%

0.0%

-5.4%

90% Confidence Interval

± 15.9

± 37.2

± 64.1

± 19.5

± 24.1

± 15.8

April 2014 from April 2013

-4.2%

-31.3%

35.5%

-9.6%

-6.1%

23.3%

90% Confidence Interval4

± 14.2

± 31.2

± 42.4

± 19.5

± 18.2

± 22.3

Year-over-year, the US is down, the South is down, the Northeast is down, and the West is down. Only the Midwest is up.

The Census bureau adds these additional notes "Changes in seasonally adjusted statistics often show irregular movement. It takes 3 months to establish a trend for new houses sold. Preliminary new home sales figures are subject to revision due to the survey methodology and definitions used. The survey is primarily based on a sample of houses selected from building permits. Since a “sale” is defined as a deposit taken or sales agreement signed, this can occur prior to a permit being issued. An estimate of these prior sales is included in the sales figure. On average, the preliminary seasonally adjusted estimate of total sales is revised about 4 percent. Changes in sales price data reflect changes in the distribution of houses by region, size, etc., as well as changes in the prices of houses with identical characteristics. Explanations of confidence intervals and sampling variability can be found on our web site listed above."

Because of the wide deviation from norm, the census bureau does not have much confidence in the Midwest number. Again, for whatever reason, the Midwest was unusual to say the least. But don't expect most of mainstream media to offer these kind of cautions, and certainly don't expect them to do anything but cheer the increase in sales while also assuming a one-month change in one region translates into a trend change for the country.

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